Tekion, Software Firm For Auto Dealers, Raises $250 Million In New Funding Round

Tekion, a Pleasanton, Calif.-based developer of cloud-based software for automotive retailers, has raised $250 million in its latest fund-raising round, bringing its valuation to $3.5 billion, the company announced Tuesday.

The investment was led by Alkeon Capital and Durable Capital. Other investors included Hyundai Motor Co., several dealer groups, Advent Capital and Index Ventures. The latter two, Advent and Index Ventures, have previously invested in Tekion.

CEO and founder Jay Vijayan left Tesla

TSLA
in 2016 where he was the chief information officer to start this company. Before that he worked at both Oracle

ORCL
 
ORCL and VMWare

VMW
 
VMW.

But Tekion is not trying to replace dealerships. Rather, Vijayan envisions cloud computing as the key to making the car-buying experience more efficient for consumers, and streamlining the operations of dealerships.

While the company does not disclose revenue or earnings, the $3.5 billion valuation is more than triple the $1.15 billion valuation about one year ago when it raised $150 million. Employment has grown from more than 400 a year ago to about, 1,350 now.

Vijayan said the new investment will enable Tekion to accelerate the rollout of its Automotive Retail Cloud platform, which is currently used by dealers in 39 states and four locations in Canada.

In simple terms, they sell dealers the IT infrastucture through which they manage inventory, track when customers’ leases expire, sell add-on protections such as extended warranties, review loan options and perform most accounting functions.

But the five-year-old startup is up against legacy providers of dealer management systems that have long-standing relationships with dealers and are trying to improve their systems. These include such companies as CDK Global

CDK
, Reynold & Reynolds or Cox Automotive’s Dealertrack.

“Tekion is turbo-charging the automotive industry by offering an end-to-end, next-generation technology software platform for both car dealers and automotive manufacturers, which provides a rich and unified consumer experience,” said Deepak Ravichandran, Alkeon Capital general partner.

In addition to supporting the rollout of the AEC platform, Vijayan said the additional investment will enable Tekion to establish a customer experience center and expanding innovation hubs in Pleasanton and in Austin, Tex., as well as pay for a 24/7 customer support center in West Chester, Ohio, north of Cincinnati.

“All our investors are in it for the long term. This strong round of funding validates industry and investors’ belief in Tekion’s disruption and our exceptional team of innovators,” Vijayan said.

Hynudai is not the first automaker to put money into Tekion. General Motors

GM
, BMW, the Nissan-Renault-Mitsubishi alliance and Exor, the Agnelli family holding company that is the largest shareholder in Ferrari and Stellantis, have previously invested in Tekion, Vijayan said.